March 6, 2009

Sisters of Charity Health and University Hospitals sign nonbinding letter of intent

CLEVELAND, Ohio – March 3, 2009 – The Sisters of Charity Health System (SCHS) and University Hospitals (UH) have jointly announced a non-binding letter of intent to modify their existing 50/50 not-for-profit ownership structures of St. Vincent Charity Hospital in Cleveland and Mercy Medical Center in Canton. An equal 50/50 joint venture between SCHS and UH will remain at St. John West Shore Hospital with the addition of UH assuming operations through a new management agreement.

According to the letter of intent, the Sisters of Charity Health System will obtain complete (100 percent) ownership and governance of St. Vincent Charity Hospital and Mercy Medical Center. All three hospitals will retain their Catholic mission, identity and faith obligations as they serve the ongoing health care needs of their communities.

The Sisters of Charity Health System and University Hospitals will make equal investments totaling $100 million for St. John West Shore Hospital. Both members also will jointly invest $30 million combined in St. Vincent Charity Hospital to create a fundraising foundation to support the hospital to better serve the community.

“This agreement will enable University Hospitals to better serve the entire St. John West Shore community,” said Thomas F. Zenty, CEO of University Hospitals. “The $100 million in new strategic investments is a clear commitment by both members to making St. John West Shore a destination hospital on the West Side. We will work closely with community leaders, physicians, clinicians, employees and volunteers to make this vision a reality.

“Meeting the community’s health care needs has been an unwavering commitment of University Hospitals since our founding in 1866,” continued Zenty. “In addition, we have a deep and abiding respect for the Sisters of Charity Health System, and believe this new agreement will better serve the health care needs of Northeast Ohio.”

“Under the Sisters of Charity Health System leadership, St. Vincent Charity will continue in Northeast Ohio its state-of-the-art care in orthopedics; the nationally renowned Joslin Diabetes Center; its leadership position in bariatric surgery; its one of only two in the state psychiatric emergency department; and its newly renovated full-service emergency department,” said Sister Judith Ann Karam, CSA, president & CEO of the Sisters of Charity Health System.

“At the forefront of this decision was how we could best serve the health care needs of these three communities – Canton, Cleveland and Westlake,” said Karam. “We have a long history of providing quality health care in Greater Cleveland and have developed strong areas of specialized care at St. Vincent Charity and St. John West Shore. In Canton we have built an outstanding hospital with exceptional services and medical expertise. Our decisions on this new agreement were based on community needs and recognition that greater effectiveness in operations, critical to the success of the hospital ministries of the Sisters of Charity Health System since 1851, will be needed in today’s environment.”

The Sisters of Charity Health System will continue its 100-year commitment to the Greater Canton community through its return to sole stewardship of Mercy Medical Center. This hospital continues to combine the best of compassionate care with high-tech innovation. Currently, the hospital has plans for capital projects in excess of $100 million to continue its excellence in medical services. Mercy has long been a leader in emergency services and medicine, cardiovascular care, cancer care, orthopedics and rehabilitation, and has recently added innovative robotic laparoscopic surgical equipment to its full complement of modern heath care services.

“In addition to Mercy’s many contributions to the community through its outreach and service, we are proud of the many accomplishments of our sponsored ministries in Stark County, including the Sisters of Charity Foundation of Canton, Early Childhood Resource Center and Mercy Medical Center,” Karam said. “The Sisters of Charity Health System continues to be committed to Stark County as evidenced by the $34.6 million we have invested through our Foundation ministry since its inception.

“Given the economic and market realities of today and evolving technology, the decision to implement this new agreement reflects how health care and the delivery system is changing,” Karam explained. “This new agreement will enable the Sisters of Charity Health System to more fully integrate our four wholly owned hospitals: two hospitals in Ohio and two hospitals in South Carolina, including Providence Hospital, South Carolina’s leading cardiovascular center. Also, we will be able to continue our long-standing involvement in the delivery of health care to the people in the western suburbs of Cleveland through our relationship with University Hospitals at St. John West Shore.

“We are pleased to continue Catholic health care to the Greater Cleveland and Canton communities, continuing our 158-year legacy of healing individuals, families and communities,” said Karam.

While this non-binding letter of intent has been approved by the boards of both health systems, approval of the transaction is subject to preparation of final legal documents, which will occur over the next several months.

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From its Cleveland headquarters, the Sisters of Charity Health System provides oversight, leadership and strategic direction to more than 20 organizations responding to community needs in Canton and Cleveland, Ohio, and South Carolina.

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